Why Shift from Transactional to Transformational Fundraising?
Do you want a robust and healthy collection of donors who support your organization’s mission? When you shift from Transactional to Transformational Fundraising, your agency will be on a trajectory to accomplish that. Firstly, your donors will know you, trust you, and be more loyal. Secondly, they will feel confident that giving to your organization makes a difference. Thirdly, your donors will feel that their investment of time and money is worthwhile. Making this shift is an opportunity to cause a funding breakthrough!
In this series of three blogs, I will demonstrate how to enhance your donor program in order to be more aligned with Transformational Fundraising. I share what my colleagues and I at Rainmaker Consulting have observed with our clients, and which strategies can make the biggest difference for your agency.
- Today’s blog, Part 1, describes what these two terms mean and how to measure your success as you shift from Transactional to Transformational Fundraising.
- In Part 2, I discuss how to create Transformational Donor Experiences.
- Part 3 will dive deeply into how to get to know your funders and build deeper partnerships with them through Discovery Meetings.
I’ll start by defining what Transactional and Transformational Fundraising mean – especially in the context of Building a Culture of Philanthropy. Transactional Fundraising is just how it sounds, it’s about an exchange. You ask someone for money and they give it to you. When a donor says, “I’m not a bank!”, they don’t want to just be a place to get money.
What are Qualities Observed in Transactional Fundraising?
When I observe a fundraising program which is mostly transactional, it means:
- There is very little 1:1 communication with donors.
- Newsletters are broad and are not customized or segmented to donor interests.
- Most communications are focused on asking for money – there are few communications about the impact of the program.
- Leadership is intent on getting new donors (especially that elusive wealthy savior donor), rather than cultivating or deepening relationships with existing donors.
- The donor database does not track personal information, donor preferences, or conversations that happened over time.
- Fundraising events are not mission-based. Instead, they are gimmicky or designed to entertain, rather than engage funders.
- Staff feels that there is little time to focus on volunteers or donor partnerships.
- Donors feel little or no loyalty to your organization.
What are Qualities Observed in Transformational Fundraising?
When you shift from Transactional to Transformational Fundraising, you have a genuine interest in your donors. You get to know them. You identify their passions and skills, and where they overlap with your organization’s needs. You find ways to involve them more deeply in your work. When a donor is engaged, you share not only what is positive about your organization, but also the challenges. You value them as a partner with your agency. Most importantly, you are committed to donors experiencing the difference they make with their gifts of time and money.
This is where the word transformational comes in… donors are transformed or changed by this experience. They are moved by not only what you do, but also by the difference they make. They feel like a partner, rather than a bank.
A Transformational Fundraising program includes:
- Financial and human resources devoted to building partnerships with donors.
- Opportunities for donors to give their time, share their wisdom, and be more involved.
- An Executive Director, development staff, and some board members who have relationships with donors and regularly communicate with them about your organization.
- Key staff and board members who have portfolios of your top 10% of donors, with individualized plans for each. They manage those plans and relationships with guidance and support from a key staff leader.
- Leaders who are committed to donors feeling moved and inspired by their giving, so the donors feel transformed by the difference they are making in the world.
How do I Measure My Success as I begin to Shift from Transactional to Transformational Fundraising?
There are specific ways to evaluate the current state of your fundraising program which you can also use as you shift from Transactional to Transformational Fundraising. These data points can measure your effectiveness at building strong and loyal donor partnerships. The most obvious Key Performance Indicator (KPI) for Transformational Fundraising is donor retention. Begin by tracking how many of your donors gave last year and again this year.
According to QGiv, national donor retention rates average between 40-45%. That means for every 100 donors, 55 to 60 of them won’t give the next year. This would never be an acceptable statistic in the for-profit business world. I don’t subscribe to the notion that we in the not-for-profit world should do everything that for-profits do. However, this is one KPI that we should pay attention to. When we don’t, we are wasting resources!
If you want to dig deeper, read Roger Craver’s book, Retention Fundraising. It includes a number of KPI’s which can help you get a reality check on just how transformational your fundraising program is. I strongly suggest you read it and measure your retention/attrition rate, in order to build a stronger program.
Quality Donor Relationships
Keep in mind that more qualitative data also matters. How many meaningful conversations do you have? How many of your donors do you know well? Do you trust your donors in a way that allows you to share your concerns and challenges? It can be more difficult to track this type of information. However, it is well worth it if you aim to shift from a transactional to transformational fundraising program and build a Culture of Philanthropy.
Remember — donors stick around and continue to give to your agency when they feel they, and their contributions, make a difference. In the second blog in this series, I will show you how you can do that!